Consider a $5,000 payment that is to be received exactly three (3) years from now. If the discount rate is 5%, what is the “present value” of the future $5,000 payment?

A pharmaceutical firm has recently developed a new medication, and is now considering whether or not to market the new medication over the next two years. The firm has decided to use “cost-benefit analysis” to make its decision, and has chosen a discount rate of 10%.

The medication is expected to generate benefits (revenues) in the form of $1 million in year one and $4 million in year two. What is the total present value of these dollar amounts?

A pharmaceutical firm has recently developed a new medication, and is now considering whether or not to market the new medication over the next two years. The firm has decided to use “cost-benefit analysis” to make its decision, and has chosen a discount rate of 10%.

However, the costs associated with the medication are $3 million in year one and $1.5 million in year two. What is the total dollar amount of these costs, in present value terms?

A pharmaceutical firm has recently developed a new medication, and is now considering whether or not to market the new medication over the next two years. The firm has decided to use “cost-benefit analysis” to make its decision, and has chosen a discount rate of 10%.

In present value terms, what is the total value of this “net benefits stream” over the two years? Is it a positive amount?